TROY, Mich., Sept. 12, 2024 (GLOBE NEWSWIRE) — Kelly (Nasdaq: KELYA, KELYB), a leading global specialty talent solutions provider, today announced that Troy R. Anderson has been named executive vice president and chief financial officer designate, effective October 14, 2024. Following an orderly transition of responsibilities, Anderson will succeed Olivier Thirot, executive vice president and chief financial officer, who on July 8, 2024, informed Kelly of his intention to retire as an officer of the Company. Upon completion of the transition, Thirot will serve as a strategic advisor to the Company.
“I am pleased to welcome Troy to Kelly as the Company’s next chief financial officer. His experience successfully executing business transformations, track record of accelerating profitable growth, and passion for developing and leading high-performing teams align exceptionally well to Kelly’s goals as we accelerate forward on our specialty journey into a new era of growth,” said Peter Quigley, president and chief executive officer. “I am also grateful to Olivier for his distinguished service to Kelly. His leadership has helped transform Kelly into a more efficient, profitable enterprise with the financial discipline and flexibility to drive long-term value creation.”
“On behalf of Kelly’s board of directors, I extend our appreciation to Olivier for his significant contributions to the Company as he prepares for an exciting new chapter,” said Terrence Larkin, chairman of Kelly’s board of directors. “I would also like to thank the members of the compensation and talent management committee for leading an exhaustive search process and identifying a candidate of Troy’s caliber to serve as Kelly’s next chief financial officer. I am confident he will serve as an excellent addition to Kelly’s senior leadership team and help build upon the progress Kelly has achieved on its journey to accelerate profitable growth and reward its shareholders.”
Anderson brings to Kelly more than 30 years of progressive experience in accounting, financial planning and analysis, external reporting, investor relations, expense management, and financial strategy. Most recently, he served as executive vice president and chief financial officer of Universal Technical Institute, Inc. (NYSE: UTI), a leading provider of education programs to prepare the workforce in transportation, skilled trades, energy, and healthcare. There, he was a key part of developing and executing a growth, diversification, and optimization strategy which resulted in revenue more than doubling, and profitability and market cap increasing significantly more during his tenure. Prior to joining Universal Technical Institute, Inc., he served as vice president, global finance and corporate controller for Conduent, Inc., a business process services company.
About Kelly®
Kelly Services, Inc. (Nasdaq: KELYA, KELYB) helps companies recruit and manage skilled workers and helps job seekers find great work. Since inventing the staffing industry in 1946, we have become experts in the many industries and local and global markets we serve. With a network of suppliers and partners around the world, we connect more than 500,000 people with work every year. Our suite of outsourcing and consulting services ensures companies have the people they need, when and where they are needed most. Headquartered in Troy, Michigan, we empower businesses and individuals to access limitless opportunities in industries such as science, engineering, technology, education, manufacturing, retail, finance, and energy. Revenue in 2023 was $4.8 billion. Learn more at kellyservices.com.
Forward-Looking Statements
This release contains statements that are forward looking in nature and, accordingly, are subject to risks and uncertainties. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about Kelly’s financial expectations, are forward-looking statements. Factors that could cause actual results to differ materially from those contained in this release include, but are not limited to, (i) changing market and economic conditions, (ii) disruption in the labor market and weakened demand for human capital resulting from technological advances, loss of large corporate customers and government contractor requirements, (iii) the impact of laws and regulations (including federal, state and international tax laws), (iv) unexpected changes in claim trends on workers’ compensation, unemployment, disability and medical benefit plans, (v) litigation and other legal liabilities (including tax liabilities) in excess of our estimates, (vi) our ability to achieve our business’s anticipated growth strategies, (vi) our future business development, results of operations and financial condition, (vii) damage to our brands, (viii) dependency on third parties for the execution of critical functions, (ix) conducting business in foreign countries, including foreign currency fluctuations, (x) availability of temporary workers with appropriate skills required by customers, (xi) cyberattacks or other breaches of network or information technology security, and (xii) other risks, uncertainties and factors discussed in this release and in the Company’s filings with the Securities and Exchange Commission. In some cases, forward-looking statements can be identified by words or phrases such as “may,” “will,” “expect,” “anticipate,” “target,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to” or other similar expressions. All information provided in this press release is as of the date of this press release and we undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations.
Kelly (Nasdaq: KELYA, KELYB) connects talented people to companies in need of their skills in areas including Science, Engineering, Education, Office, Contact Center, Light Industrial, and more. We’re always thinking about what’s next in the evolving world of work, and we help people ditch the script on old ways of thinking and embrace the value of all workstyles in the workplace. We directly employ nearly 350,000 people around the world and connect thousands more with work through our global network of talent suppliers and partners in our outsourcing and consulting practice. Revenue in 2021 was $4.9 billion. Visit kellyservices.com and let us help with what’s next for you.
Joe Gomes, CFA, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
2Q Results. The sale of the European business and the Motion Recruitment Partners acquisition affected revenue, as revenue declined to $1.06 billion from $1.22 billion last year, but in-line with our estimate of $1.07 billion. Net income for the quarter was $4.6 million, or $0.13/sh, from $7.5 million, or $0.20/sh, a year ago, as the Europe staffing sale contributed to the decrease. We estimated net income of $14.9 million or $0.42/sh.
Growth and Stability. While the uncertain market conditions continue to impact Kelly’s segments, management noted that segments saw sequential stabilization, while others continued to grow such as Education. We believe the stabilization indicates the bottom of demand for some of Kelly’s services, and management’s expectation of modest improvement in most of its segments in the second half gives this credence.
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Q2 operating earnings of $12.2 million; $28.1 million on an adjusted basis, up 95%
Q2 revenue down following sale of European staffing operations; up 0.6% on an organic basis
Q2 adjusted EBITDA margin increased 170 basis points to 3.7% driven by meaningful reduction in operating expenses resulting from business transformation initiatives and sale of European staffing operations
Company expects further expansion of EBITDA margin from the May 31, 2024 acquisition of Motion Recruitment Partners, LLC (“MRP”)
TROY, Mich. , Aug. 08, 2024 (GLOBE NEWSWIRE) — Kelly (Nasdaq: KELYA, KELYB), a leading specialty talent solutions provider, today announced results for the second quarter of 2024.
Peter Quigley, president and chief executive officer, announced revenue for the second quarter of 2024 totaled $1.06 billion, a 13.1% decrease compared to the corresponding quarter of 2023 resulting primarily from the sale of the company’s European staffing operations on January 2, 2024. Excluding the impact of the sale of the European staffing operations and the recent acquisition of MRP, revenue improved 0.6% on an organic basis reflecting the continuing impact of customers’ more guarded approach to hiring and initiating new projects or capital spending. MRP revenue is included in reported revenue upon acquisition beginning in June 2024 and added 400 bps to reported year-over-year revenue growth.
Kelly reported operating earnings in the second quarter of 2024 of $12.2 million, compared to earnings of $6.2 million reported in the second quarter of 2023. Adjusted earnings were $28.1 million in the second quarter of 2024. The $15.9 million increase from reported earnings includes a loss on the sale of our European staffing operations, charges related to transformation actions and the sale of our European staffing operations, an impairment charge related to excess leased property and a gain on the sale of assets related to the Ayers Group. The acquisition of MRP added $1.5 million of earnings from operations in the second quarter of 2024. Adjusted earnings in the second quarter of 2023 were $14.2 million. The $8.0 million increase from reported earnings included transformation related charges and an asset impairment charge. The European staffing operations produced $1 million of earnings from operations on an adjusted basis in the second quarter of 2023.
Earnings per share in the second quarter of 2024 were $0.12 compared to earnings per share of $0.20 in the second quarter of 2023. Included in earnings per share in the second quarter of 2024 were a loss on the sale of EMEA staffing operations and a gain on the sale of Ayers Group, net of tax of $0.16, as well as transaction costs related to the acquisition of MRP, restructuring charges associated with our transformation and an asset impairment charge, net of tax, of $0.43. Included in the earnings per share in the second quarter of 2023 are $0.16 per share related to restructuring charges and an asset impairment charge, net of tax. On an adjusted basis, earnings per share were $0.71 in the second quarter of 2024, a significant improvement from $0.36 per share in the corresponding quarter of 2023.
“In the second quarter, employers continued to take a cautious approach to hiring, though customer demand stabilized on a sequential basis across much of our business – a development that is reflected in Kelly’s organic revenue for the quarter,” said Quigley. “As we continued to navigate uncertain market conditions, we remained focused on what we can control. Our ongoing growth and efficiency initiatives increased Kelly’s EBITDA margin in the first half of the year to 3.4% on an organic, adjusted basis – at the midpoint of our initial expectation for EBITDA margin expansion which we established one year ago. This improvement, combined with the scale and capabilities we added through our recent acquisition of MRP, position Kelly to accelerate profitable growth as market conditions improve.”
Kelly also reported that on August 7, its board of directors declared a dividend of $0.075 per share. The dividend is payable on September 4, 2024, to stockholders of record as of the close of business on August 21, 2024.
In conjunction with its second-quarter earnings release, Kelly has published a financial presentation on the Investor Relations page of its public website and will host a conference call at 9 a.m. ET on August 8 to review the results and answer questions. The call may be accessed in one of the following ways:
Via the telephone (877) 692-8955 (toll free) or (234) 720-6979 (caller paid) Enter access code 5728672 After the prompt, please enter “#”
A recording of the conference call will be available after 1:30 p.m. ET on August 8, 2024, at (866) 207-1041 (toll-free) and (402) 970-0847 (caller-paid). The access code is 2784290#. The recording will also be available at kellyservices.com during this period.
This release contains statements that are forward looking in nature and, accordingly, are subject to risks and uncertainties. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about Kelly’s financial expectations, are forward-looking statements. Factors that could cause actual results to differ materially from those contained in this release include, but are not limited to, (i) changing market and economic conditions, (ii) disruption in the labor market and weakened demand for human capital resulting from technological advances, loss of large corporate customers and government contractor requirements, (iii) the impact of laws and regulations (including federal, state and international tax laws), (iv) unexpected changes in claim trends on workers’ compensation, unemployment, disability and medical benefit plans, (v) litigation and other legal liabilities (including tax liabilities) in excess of our estimates, (vi) our ability to achieve our business’s anticipated growth strategies, (vii) our future business development, results of operations and financial condition, (viii) damage to our brands, (ix) dependency on third parties for the execution of critical functions, (x) conducting business in foreign countries, including foreign currency fluctuations, (xi) availability of temporary workers with appropriate skills required by customers, (xii) cyberattacks or other breaches of network or information technology security, and (xiii) other risks, uncertainties and factors discussed in this release and in the Company’s filings with the Securities and Exchange Commission. In some cases, forward-looking statements can be identified by words or phrases such as “may,” “will,” “expect,” “anticipate,” “target,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to” or other similar expressions. All information provided in this press release is as of the date of this press release and we undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations.
About Kelly®
Kelly Services, Inc. (Nasdaq: KELYA, KELYB) helps companies recruit and manage skilled workers and helps job seekers find great work. Since inventing the staffing industry in 1946, we have become experts in the many industries and local and global markets we serve. With a network of suppliers and partners around the world, we connect more than 500,000 people with work every year. Our suite of outsourcing and consulting services ensures companies have the people they need, when and where they are needed most. Headquartered in Troy, Michigan, we empower businesses and individuals to access limitless opportunities in industries such as science, engineering, technology, education, manufacturing, retail, finance, and energy. Revenue in 2023 was $4.8 billion. Learn more at kellyservices.com.
TROY, Mich., July 25, 2024 (GLOBE NEWSWIRE) — Kelly, a leading global specialty talent solutions provider, will release its second-quarter earnings before the market opens on Thursday, August 8, 2024. In conjunction with its second-quarter earnings release, Kelly will publish a financial presentation on the Investor Relations page of its public website and will host a conference call at 9 a.m. ET.
The call may be accessed in one of the following ways:
Via the telephone: (877) 692-8955 (toll free) or (234) 720-6979 (caller paid) Enter access code 5728672 After the prompt, please enter “#”
A recording of the conference call will be available after 1:30 p.m. ET on August 8, 2024, at (866) 207-1041 (toll-free) and (402) 970-0847 (caller-paid). The access code is 2784290#. The recording will also be available at kellyservices.com during this period.
About Kelly
Kelly Services, Inc. (Nasdaq: KELYA, KELYB) helps companies recruit and manage skilled workers and helps job seekers find great work. Since inventing the staffing industry in 1946, we have become experts in the many industries and local and global markets we serve. With a network of suppliers and partners around the world, we connect more than 500,000 people with work every year. Our suite of outsourcing and consulting services ensures companies have the people they need, when and where they are needed most. Headquartered in Troy, Michigan, we empower businesses and individuals to access limitless opportunities in industries such as science, engineering, technology, education, manufacturing, retail, finance, and energy. Revenue in 2023 was $4.8 billion. Learn more at kellyservices.com.
Kelly (Nasdaq: KELYA, KELYB) connects talented people to companies in need of their skills in areas including Science, Engineering, Education, Office, Contact Center, Light Industrial, and more. We’re always thinking about what’s next in the evolving world of work, and we help people ditch the script on old ways of thinking and embrace the value of all workstyles in the workplace. We directly employ nearly 350,000 people around the world and connect thousands more with work through our global network of talent suppliers and partners in our outsourcing and consulting practice. Revenue in 2021 was $4.9 billion. Visit kellyservices.com and let us help with what’s next for you.
Joe Gomes, CFA, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
MRP Call. On Tuesday, Kelly management held a conference call to discuss the completion of the Motion Recruitment Partners (MRP) deal. Management provided additional details regarding the financial profile of MRP and how it will integrate into Kelly, valuation details regarding the deal, and the Company’s goal of reducing debt as a result of the acquisition.
Improved Financial Profile. Kelly improves on both its gross and adjusted EBITDA margins with the deal. MRP had a 30% gross margin and 7% adj. EBITDA margin for fiscal year 2023 compared to Kelly’s 20% and 2.3%, respectively. Like the rest of the staffing industry, MRP’s fiscal 2023 was impacted by the macro environment as margins decreased from 33% gross and 9% adj. EBITDA for the 2022 fiscal year. We believe that MRP’s financial performance will be beneficial in the short-term for Kelly, but more so in the future when the environment starts to normalize.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
Kelly (Nasdaq: KELYA, KELYB) connects talented people to companies in need of their skills in areas including Science, Engineering, Education, Office, Contact Center, Light Industrial, and more. We’re always thinking about what’s next in the evolving world of work, and we help people ditch the script on old ways of thinking and embrace the value of all workstyles in the workplace. We directly employ nearly 350,000 people around the world and connect thousands more with work through our global network of talent suppliers and partners in our outsourcing and consulting practice. Revenue in 2021 was $4.9 billion. Visit kellyservices.com and let us help with what’s next for you.
Joe Gomes, CFA, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Portfolio Optimization. Continuing its strategic actions to optimize its operating model and unlock capital, Kelly has sold the Ayers Group, a division of KellyOCG, to Keystone Partners, a Silver Oak Services Partners LLC portfolio company. While financial terms were not disclosed, the transaction further allows the Company to focus resources on specialties where KellyOCG is well positioned to compete and win over the long term, in our view.
Ayers Group. A provider of outplacement, executive coaching, and leadership development solutions to employers, Ayers was acquired by Kelly in 2006 for $4.6 million, with another $1.3 million of potential earnouts. Ayers was generating about $10 million of revenue at the time and while Kelly does not break out Ayers’ current revenue contribution, various sources estimate current revenue in the $20 million range.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
Kelly (Nasdaq: KELYA, KELYB) connects talented people to companies in need of their skills in areas including Science, Engineering, Education, Office, Contact Center, Light Industrial, and more. We’re always thinking about what’s next in the evolving world of work, and we help people ditch the script on old ways of thinking and embrace the value of all workstyles in the workplace. We directly employ nearly 350,000 people around the world and connect thousands more with work through our global network of talent suppliers and partners in our outsourcing and consulting practice. Revenue in 2021 was $4.9 billion. Visit kellyservices.com and let us help with what’s next for you.
Joe Gomes, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Operating Environment. The operating environment remains relatively unchanged in terms of the overall macro environment, the availability of top talent, labor force participation, quit rates, and some other key labor factors. We continue to believe Kelly is well positioned to capitalize on any improvement in the operating environment.
Adjusted EBITDA Margin. The sale of the lower margin European Staffing business combined with management’s focus on cost reduction is showing up in the financial results, with adjusted EBITDA margin up 120bp year-over-year. We expect a similar improvement in 2Q24 and the MRP acquisition likely will drive margins even higher.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
Kelly (Nasdaq: KELYA, KELYB) connects talented people to companies in need of their skills in areas including Science, Engineering, Education, Office, Contact Center, Light Industrial, and more. We’re always thinking about what’s next in the evolving world of work, and we help people ditch the script on old ways of thinking and embrace the value of all workstyles in the workplace. We directly employ nearly 350,000 people around the world and connect thousands more with work through our global network of talent suppliers and partners in our outsourcing and consulting practice. Revenue in 2021 was $4.9 billion. Visit kellyservices.com and let us help with what’s next for you.
Joe Gomes, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
1Q24. There are a lot of moving parts, with the sale of the European staffing business and some one-time expenses. On an organic basis, revenue declined 2.6% y-o-y to $945.6 million due to ongoing soft demand, although the Education segment grew 16.2% y-o-y. Adjusted EBITDA margin was up 110bp to 3.2% driven by the sale of the European business and ongoing expenses reduction initiatives. Adjusted net earnings rose to $20.3 million, or $0.56/sh, from $15.9 million, or $0.42/sh in 1Q23.
GAAP Results. Revenue of $1.05 billion declined 17.6% (17.7% decline on constant currency basis) from last year. Gross profit rate was down 30bp to 19.7% y-o-y with mix and lower permanent placement fees offsetting the benefit from the sale of the European staffing business. Operating earnings of $26.8 million rose 150.2%. Net income was $25.8 million, or $0.70/sh, versus $10.9 million, or $0.29/sh in the prior year.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
Kelly (Nasdaq: KELYA, KELYB) connects talented people to companies in need of their skills in areas including Science, Engineering, Education, Office, Contact Center, Light Industrial, and more. We’re always thinking about what’s next in the evolving world of work, and we help people ditch the script on old ways of thinking and embrace the value of all workstyles in the workplace. We directly employ nearly 350,000 people around the world and connect thousands more with work through our global network of talent suppliers and partners in our outsourcing and consulting practice. Revenue in 2021 was $4.9 billion. Visit kellyservices.com and let us help with what’s next for you.
Joe Gomes, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Acquisition. Friday, Kelly Services announced the largest acquisition in Company History. Kelly is purchasing Motion Recruitment Partners LLC (MRP) for $425 million, with an additional earnout potential of up to $60 million. The acquisition significantly expands and strengthens Kelly’s scale and capabilities, in our view. The transaction will enhance the revenue growth potential and accelerate EBITDA margin expansion for Kelly.
Financing. Kelly expects to fund the purchase with debt and available capital, including the $100 million recently received from the sale of the European staffing business. At year-end, Kelly had $427 million of available liquidity, consisting of $126 million of cash and $301 million of availability under undrawn credit facilities. The transaction is expected to close in the second quarter of 2024.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
Kelly (Nasdaq: KELYA, KELYB) connects talented people to companies in need of their skills in areas including Science, Engineering, Education, Office, Contact Center, Light Industrial, and more. We’re always thinking about what’s next in the evolving world of work, and we help people ditch the script on old ways of thinking and embrace the value of all workstyles in the workplace. We directly employ nearly 350,000 people around the world and connect thousands more with work through our global network of talent suppliers and partners in our outsourcing and consulting practice. Revenue in 2021 was $4.9 billion. Visit kellyservices.com and let us help with what’s next for you.
Joe Gomes, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
4Q23 Results. Kelly reported revenue of $1,232.2 million, essentially flat y-o-y and down just 1.3% on a constant currency basis. We had estimated $1,220 million. Adjusted net income was $34.1 million or EPS of $0.93, compared to $7 million, or $0.18/sh last year. We had estimated EPS of $0.56. Adjusted EBITDA was $32.5 million, or a 2.6% margin, up from $24.1 million and 2%, respectively, last year. We had forecast $33.8 million.
International Sale. As previously announced, Kelly completed the sale of its International staffing business in early January. This business generated some $810 million of revenue and $120 million of gross profit in 2023.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
Kelly (Nasdaq: KELYA, KELYB) connects talented people to companies in need of their skills in areas including Science, Engineering, Education, Office, Contact Center, Light Industrial, and more. We’re always thinking about what’s next in the evolving world of work, and we help people ditch the script on old ways of thinking and embrace the value of all workstyles in the workplace. We directly employ nearly 350,000 people around the world and connect thousands more with work through our global network of talent suppliers and partners in our outsourcing and consulting practice. Revenue in 2021 was $4.9 billion. Visit kellyservices.com and let us help with what’s next for you.
Joe Gomes, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
European Staffing Sale. Yesterday, Kelly Services announced the completion of the sale of its European staffing business to Gi Group Holdings S.P.A. Kelly previously announced on November 2, 2023, that it had entered into a definitive agreement to sell the business to Gi. Kelly is retaining its global footprint and will continue to provide higher margin, higher growth potential MSP, RPO, and FSP solutions to customers in the EMEA region through KellyOCG.
Details. Kelly received cash proceeds of €100 million upon closing the transaction. An additional up to €30 million of proceeds from an earnout provision based on a multiple of an adjusted 2023 EBITDA measure would be payable in the second quarter of 2024 if achieved. Cash proceeds are expected to be redeployed in pursuit of growth through organic and inorganic investments. The Company has not disclosed the financial impact of removing the International Staffing business to the income statement, but we expect a disclosure by the fourth quarter conference call.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
Kelly (Nasdaq: KELYA, KELYB) connects talented people to companies in need of their skills in areas including Science, Engineering, Education, Office, Contact Center, Light Industrial, and more. We’re always thinking about what’s next in the evolving world of work, and we help people ditch the script on old ways of thinking and embrace the value of all workstyles in the workplace. We directly employ nearly 350,000 people around the world and connect thousands more with work through our global network of talent suppliers and partners in our outsourcing and consulting practice. Revenue in 2021 was $4.9 billion. Visit kellyservices.com and let us help with what’s next for you.
Joe Gomes, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
3Q23 Results. Revenue of $1,118 million was down 4.3% y-o-y and down 5.8% on a constant currency basis. We had estimated $1,180 million. The Company incurred $15.4 million of transformation expenses in the quarter. Adjusted net income was $18.1 million or EPS of $0.50. We had estimated EPS of $0.28. Adjusted EBITDA was $25.5 million, or a 2.3% margin.
Transformation. Kelly continues to move ahead with the transformation plan, already eliminating a significant amount of expenses. We expect the transformation to position Kelly to accelerate profitable growth over the long-term with improved adjusted EBITDA margins.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
Q3 operating earnings were break-even, or up 60% to $15.5 million on an adjusted basis
Q3 revenue down 4.3%; down 5.8% in constant currency
Q3 adjusted EBITDA margin increased to 2.3% compared to 1.6% in the prior year driven by meaningful reduction in operating expenses resulting from business transformation initiative
Company expects sale of European staffing operations and near-term outcome from growth initiatives to drive further expansion of adjusted EBITDA margin
TROY, Mich., Nov. 9, 2023 /PRNewswire/ — Kelly (Nasdaq: KELYA, KELYB), a leading global specialty talent solutions provider, today announced results for the third quarter of 2023.
Peter Quigley, president and chief executive officer, announced revenue for the third quarter of 2023 totaled $1.1 billion, a 4.3% decrease, or 5.8% decrease in constant currency, compared to the corresponding quarter of 2022. Year-over-year revenue trends were impacted by customers’ more guarded approach to hiring and initiating new projects or capital spending, partially offset by favorable currency impacts.
“In the third quarter, persistent macroeconomic uncertainty continued to temper demand for temporary and permanent staffing services,” said Quigley. “As expected, results in SET and P&I reflected these challenges, while our Education segment and more resilient outcome-based solutions in P&I once again delivered year-over-year growth. We continued to focus on what we can control in this challenging operating environment, driving significant progress in the execution of our transformation initiatives – the benefits of which are evident in our operating results.”
Kelly reported break-even operating earnings in the third quarter of 2023 compared to a loss of $21.4 million reported in the third quarter of 2022. Earnings in the third quarter of 2023 include $15.4 million of transformation-related charges. Excluding the transformation-related charges, adjusted earnings from operations were $15.5 million. Loss from operations in the third quarter of 2022 included a $30.7 million goodwill impairment charge and adjusted earnings were $9.5 million. Adjusted earnings improved 60% year-over-year primarily as a result of lower operating expenses due to our ongoing transformation initiatives.
Earnings per share in the third quarter of 2023 were $0.18 compared to a loss per share of $0.43 in the third quarter of 2022. Included in the earnings per share in the third quarter of 2023 is a $0.32 loss per share related to transformation-related charges, net of tax. Included in the third quarter of 2022 was a $0.67 loss per share, net of tax, from a goodwill impairment charge. On an adjusted basis, earnings per share were $0.50 in the third quarter of 2023, double the $0.25 earnings per share in the corresponding quarter of 2022.
Quigley went on to provide an update on the company’s business transformation initiative.
“Following the implementation of strategic restructuring activities at the outset of the third quarter, we remained focused on sustaining these structural improvements across the enterprise. We also made progress on several initiatives that are positioning Kelly to accelerate profitable growth over the long term. With the efficiency phase of our transformation on-track, our growth initiatives delivering encouraging early results, and the sale of our European staffing business poised to benefit both of these efforts, we remain committed to driving continued improvement of our adjusted EBITDA margin and maximizing value creation.”
In the fourth quarter of 2023, Kelly expects to achieve an adjusted EBITDA margin in the range of 2.8% to 3.0%, reflecting the impact of market conditions that are more challenging than anticipated. Assuming the benefit of a full year of its transformation-related savings, the sale of its European staffing business and current top-line trends, the company would expect to reach a normalized, adjusted EBITDA margin in the range of 3.3 to 3.5%.
Kelly also reported that on November 7, its board of directors declared a dividend of $0.075 per share. The dividend is payable on December 6, 2023, to shareholders of record as of the close of business on November 22, 2023.
In conjunction with its third-quarter earnings release, Kelly has published a financial presentation on the Investor Relations page of its public website and will host a conference call at 9 a.m. ET on November 9 to review the results and answer questions. The call may be accessed in one of the following ways:
Via the Telephone (877) 692-8955 (toll free) or (234) 720-6979 (caller paid) Enter access code 5728672 After the prompt, please enter ”#”
A recording of the conference call will be available after 2:30 p.m. ET on November 9, 2023, at (866) 207-1041 (toll-free) and (402) 970-0847 (caller-paid). The access code is 7027637#. The recording will also be available at kellyservices.com during this period.
This release contains statements that are forward looking in nature and, accordingly, are subject to risks and uncertainties. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about Kelly’s financial expectations, are forward-looking statements. Factors that could cause actual results to differ materially from those contained in this release include, but are not limited to, (i) changing market and economic conditions, (ii) disruption in the labor market and weakened demand for human capital resulting from technological advances, loss of large corporate customers and government contractor requirements, (iii) the impact of laws and regulations (including federal, state and international tax laws), (iv) unexpected changes in claim trends on workers’ compensation, unemployment, disability and medical benefit plans, (v) litigation and other legal liabilities (including tax liabilities) in excess of our estimates, (vi) our ability to achieve our business’s anticipated growth strategies, (vii) our future business development, results of operations and financial condition, (viii) damage to our brands, (ix) dependency on third parties for the execution of critical functions, (x) conducting business in foreign countries, including foreign currency fluctuations, (xi) availability of temporary workers with appropriate skills required by customers, (xii) cyberattacks or other breaches of network or information technology security, and (xiii) other risks, uncertainties and factors discussed in this release and in the Company’s filings with the Securities and Exchange Commission. In some cases, forward-looking statements can be identified by words or phrases such as “may,” “will,” “expect,” “anticipate,” “target,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to” or other similar expressions. All information provided in this press release is as of the date of this press release and we undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations.
About Kelly®
Kelly Services, Inc. (Nasdaq: KELYA, KELYB) helps companies recruit and manage skilled workers and helps job seekers find great work. Since inventing the staffing industry in 1946, we have become experts in the many industries and local and global markets we serve. With a network of suppliers and partners around the world, we connect more than 450,000 people with work every year. Our suite of outsourcing and consulting services ensures companies have the people they need, when and where they are needed most. Headquartered in Troy, Michigan, we empower businesses and individuals to access limitless opportunities in industries such as science, engineering, technology, education, manufacturing, retail, finance, and energy. Revenue in 2022 was $5.0 billion. Learn more at kellyservices.com.
FOR THE 13 WEEKS ENDED OCTOBER 1, 2023 AND OCTOBER 2, 2022
(UNAUDITED)
(In millions of dollars except per share data)
%
CC %
2023
2022
Change
Change
Change
Revenue from services
$
1,118.0
$
1,167.9
$
(49.9)
(4.3)
%
(5.8)
%
Cost of services
889.5
927.3
(37.8)
(4.1)
Gross profit
228.5
240.6
(12.1)
(5.1)
(6.3)
Selling, general and administrative expenses
228.4
231.1
(2.7)
(1.2)
(2.4)
Goodwill impairment charge
—
30.7
(30.7)
NM
Loss on disposal
—
0.2
(0.2)
NM
Earnings (loss) from operations
0.1
(21.4)
21.5
NM
Other income (expense), net
1.6
0.2
1.4
NM
Earnings (loss) before taxes
1.7
(21.2)
22.9
NM
Income tax expense (benefit)
(4.9)
(5.0)
0.1
0.1
Net earnings (loss)
$
6.6
$
(16.2)
$
22.8
NM
Basic earnings (loss) per share
$
0.18
$
(0.43)
$
0.61
NM
Diluted earnings (loss) per share
$
0.18
$
(0.43)
$
0.61
NM
STATISTICS:
Permanent placement revenue (included in revenue from services)
$
14.6
$
19.8
$
(5.2)
(26.3)
%
(28.5)
%
Gross profit rate
20.4
%
20.6
%
(0.2)
pts.
Conversion rate
0.0
%
(8.9)
%
8.9
pts.
Adjusted EBITDA
$
25.5
$
19.1
$
6.4
Adjusted EBITDA margin
2.3
%
1.6
%
0.7
pts.
Effective income tax rate
(299.3)
%
23.4
%
(322.7)
pts.
Average number of shares outstanding (millions):
Basic
35.4
37.9
Diluted
35.8
37.9
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 39 WEEKS ENDED OCTOBER 1, 2023 AND OCTOBER 2, 2022
(UNAUDITED)
(In millions of dollars except per share data)
%
CC %
2023
2022
Change
Change
Change
Revenue from services
$
3,603.5
$
3,731.6
$
(128.1)
(3.4)
%
(3.8)
%
Cost of services
2,880.3
2,970.0
(89.7)
(3.0)
Gross profit
723.2
761.6
(38.4)
(5.0)
(5.2)
Selling, general and administrative expenses
703.8
707.3
(3.5)
(0.5)
(0.8)
Asset impairment charge
2.4
—
2.4
NM
Goodwill impairment charge
—
30.7
(30.7)
NM
Loss on disposal
—
18.7
(18.7)
NM
Gain on sale of assets
—
(5.3)
5.3
NM
Earnings from operations
17.0
10.2
6.8
67.0
Loss on investment in Persol Holdings
—
(67.2)
67.2
NM
Loss on currency translation from liquidation of subsidiary(1)
—
(20.4)
20.4
NM
Other income (expense), net
3.0
1.9
1.1
55.9
Earnings (loss) before taxes and equity in net earnings of affiliate
20.0
(75.5)
95.5
NM
Income tax expense (benefit)
(5.0)
(13.1)
8.1
61.8
Net earnings (loss) before equity in net earnings of affiliate
25.0
(62.4)
87.4
NM
Equity in net earnings of affiliate
—
0.8
(0.8)
NM
Net earnings (loss)
$
25.0
$
(61.6)
$
86.6
NM
Basic earnings (loss) per share
$
0.68
$
(1.62)
$
2.30
NM
Diluted earnings (loss) per share
$
0.67
$
(1.62)
$
2.29
NM
STATISTICS:
Permanent placement revenue (included in revenue from services)
$
47.8
$
71.2
$
(23.4)
(32.9)
%
(33.3)
%
Gross profit rate
20.1
%
20.4
%
(0.3)
pts.
Conversion rate
2.4
%
1.3
%
1.1
pts.
Adjusted EBITDA
$
76.9
$
81.5
$
(4.6)
Adjusted EBITDA margin
2.1
%
2.2
%
(0.1)
pts.
Effective income tax rate
(25.1)
%
17.4
%
(42.5)
pts.
Average number of shares outstanding (millions):
Basic
36.2
38.2
Diluted
36.5
38.2
(1) Subsequent to the sale of the Persol Holdings investment, the Company commenced the dissolution process of the Kelly Services Japan subsidiary, which was considered substantially liquidated as of the first quarter-end 2022, resulting in the recognition of the $20.4 million loss on currency translation from liquidation of this subsidiary in the first quarter of 2022.
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
Third Quarter
%
CC %
2023
2022
Change
Change
Professional & Industrial
Revenue from services
$
364.5
$
408.6
(10.8)
%
(10.5)
%
Gross profit
65.5
70.3
(6.9)
(6.5)
SG&A expenses excluding restructuring charges
53.7
65.3
(17.7)
(17.6)
Restructuring charges
4.0
—
NM
NM
Total SG&A expenses
57.7
65.3
(11.6)
(11.4)
Earnings from operations
7.8
5.0
54.2
Earnings from operations excluding restructuring charges
11.8
5.0
133.7
Gross profit rate
17.9
%
17.2
%
0.7
pts.
Science, Engineering & Technology
Revenue from services
$
295.7
$
321.3
(8.0)
%
(8.0)
%
Gross profit
68.0
76.3
(10.8)
(10.9)
Total SG&A expenses
47.8
53.4
(10.4)
(10.5)
Earnings from operations
20.2
22.9
(11.7)
Gross profit rate
23.0
%
23.7
%
(0.7)
pts.
Education
Revenue from services
$
128.1
$
104.3
22.9
%
22.9
%
Gross profit
19.8
16.6
19.2
19.2
Total SG&A expenses
22.4
21.4
5.0
5.0
Earnings (loss) from operations
(2.6)
(4.8)
44.8
Gross profit rate
15.5
%
15.9
%
(0.4)
pts.
Outsourcing & Consulting
Revenue from services
$
114.1
$
118.5
(3.8)
%
(4.0)
%
Gross profit
41.5
44.1
(6.0)
(6.7)
SG&A expenses excluding restructuring charges
37.2
37.7
(1.5)
(2.4)
Restructuring charges
1.8
—
NM
NM
Total SG&A expenses
39.0
37.7
3.3
2.2
Goodwill impairment charge
—
30.7
NM
Earnings (loss) from operations
2.5
(24.3)
NM
Earnings (loss) from operations excluding restructuring charges
4.3
(24.3)
NM
Gross profit rate
36.4
%
37.2
%
(0.8)
pts.
International
Revenue from services
$
220.6
$
215.5
2.4
%
(6.2)
%
Gross profit
33.7
33.3
1.0
(7.6)
Total SG&A expenses
31.2
31.4
(0.7)
(8.7)
Earnings from operations
2.5
1.9
27.5
Gross profit rate
15.3
%
15.5
%
(0.2)
pts.
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
September Year to Date
%
CC %
2023
2022
Change
Change
Professional & Industrial
Revenue from services
$
1,131.3
$
1,268.7
(10.8)
%
(10.4)
%
Gross profit
200.4
231.2
(13.3)
(12.8)
SG&A expenses excluding restructuring charges
176.5
203.8
(13.4)
(13.1)
Restructuring charges
7.3
0.3
NM
NM
Total SG&A expenses
183.8
204.1
(9.9)
(9.6)
Asset impairment charge
0.3
—
NM
Earnings from operations
16.3
27.1
(40.4)
Earnings from operations excluding restructuring charges
23.6
27.4
(14.4)
Gross profit rate
17.7
%
18.2
%
(0.5)
pts.
Science, Engineering & Technology
Revenue from services
$
903.5
$
962.7
(6.2)
%
(6.1)
%
Gross profit
207.4
225.3
(7.9)
(7.9)
Total SG&A expenses
150.6
161.4
(6.7)
(6.7)
Asset impairment charge
0.1
—
NM
Earnings from operations
56.7
63.9
(11.2)
Gross profit rate
23.0
%
23.4
%
(0.4)
pts.
Education
Revenue from services
$
583.9
$
433.2
34.8
%
34.8
%
Gross profit
91.6
69.2
32.4
32.4
Total SG&A expenses
69.3
60.4
14.8
14.8
Earnings from operations
22.3
8.8
152.7
Gross profit rate
15.7
%
16.0
%
(0.3)
pts.
Outsourcing & Consulting
Revenue from services
$
342.4
$
352.0
(2.7)
%
(2.3)
%
Gross profit
124.4
127.6
(2.5)
(2.0)
SG&A expenses excluding restructuring charges
114.9
111.7
2.8
2.7
Restructuring charges
2.3
0.1
NM
NM
Total SG&A expenses
117.2
111.8
4.7
4.6
Asset impairment charge
2.0
—
NM
Goodwill impairment charge
—
30.7
NM
Earnings from operations
5.2
(14.9)
NM
Earnings from operations excluding restructuring charges
7.5
(14.8)
NM
Gross profit rate
36.3
%
36.3
%
—
pts.
International
Revenue from services
$
657.5
$
715.9
(8.2)
%
(11.2)
%
Gross profit
99.4
108.3
(8.2)
(11.1)
Total SG&A expenses
96.2
99.2
(3.0)
(5.8)
Earnings from operations
3.2
9.1
(64.9)
Gross profit rate
15.1
%
15.1
%
—
pts.
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In millions of dollars)
October 1, 2023
January 1, 2023
October 2, 2022
Current Assets
Cash and equivalents
$
117.2
$
153.7
$
122.4
Trade accounts receivable, less allowances of
$11.1, $11.2, and $12.1, respectively
1,388.2
1,491.6
1,519.9
Prepaid expenses and other current assets
86.1
69.9
83.1
Assets held for sale
—
—
4.7
Total current assets
1,591.5
1,715.2
1,730.1
Noncurrent Assets
Property and equipment, net
28.8
27.8
24.9
Operating lease right-of-use assets
59.9
66.8
67.3
Deferred taxes
315.3
299.7
300.7
Goodwill, net
151.1
151.1
161.4
Other assets
403.4
403.2
397.5
Total noncurrent assets
958.5
948.6
951.8
Total Assets
$
2,550.0
$
2,663.8
$
2,681.9
Current Liabilities
Short-term borrowings
$
—
$
0.7
$
0.1
Accounts payable and accrued liabilities
647.5
723.3
735.2
Operating lease liabilities
13.2
14.7
14.4
Accrued payroll and related taxes
287.8
315.8
321.4
Accrued workers’ compensation and other claims
22.8
22.9
24.4
Income and other taxes
54.0
51.4
47.5
Total current liabilities
1,025.3
1,128.8
1,143.0
Noncurrent Liabilities
Operating lease liabilities
51.5
55.0
55.6
Accrued workers’ compensation and other claims
40.5
40.7
43.4
Accrued retirement benefits
185.6
174.1
172.7
Other long-term liabilities
11.4
11.0
14.5
Total noncurrent liabilities
289.0
280.8
286.2
Stockholders’ Equity
Common stock
38.5
38.5
38.5
Treasury stock
(57.4)
(20.1)
(12.4)
Paid-in capital
29.3
28.0
26.6
Earnings invested in the business
1,233.0
1,216.3
1,220.1
Accumulated other comprehensive income (loss)
(7.7)
(8.5)
(20.1)
Total stockholders’ equity
1,235.7
1,254.2
1,252.7
Total Liabilities and Stockholders’ Equity
$
2,550.0
$
2,663.8
$
2,681.9
STATISTICS:
Working Capital
$
566.2
$
586.4
$
587.1
Current Ratio
1.6
1.5
1.5
Debt-to-capital %
0.0
%
0.1
%
0.0
%
Global Days Sales Outstanding
63
61
64
Year-to-Date Free Cash Flow
$
21.0
$
(88.3)
$
(117.3)
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 39 WEEKS ENDED OCTOBER 1, 2023 AND OCTOBER 2, 2022
(UNAUDITED)
(In millions of dollars)
2023
2022
Cash flows from operating activities:
Net earnings (loss)
$
25.0
$
(61.6)
Adjustments to reconcile net earnings (loss) to net cash from operating activities:
Asset impairment charge
2.4
—
Goodwill impairment charge
—
30.7
Deferred income taxes on goodwill impairment charge
—
(5.3)
Loss on disposal
—
18.7
Depreciation and amortization
25.6
24.7
Operating lease asset amortization
12.4
14.2
Provision for credit losses and sales allowances
1.4
1.7
Stock-based compensation
7.9
5.9
Gain on sale of equity securities
(2.0)
—
Loss on investment in Persol Holdings
—
67.2
Loss on currency translation from liquidation of subsidiary
—
20.4
Gain on foreign currency remeasurement
—
(5.5)
Gain on sale of assets
—
(5.3)
Equity in net earnings of PersolKelly Asia Pacific
—
(0.8)
Other, net
0.5
3.5
Changes in operating assets and liabilities, net of acquisition
(39.8)
(220.2)
Net cash from (used in) operating activities
33.4
(111.7)
Cash flows from investing activities:
Capital expenditures
(12.4)
(5.6)
Proceeds from sale of assets
—
4.5
Acquisition of company, net of cash received
—
(143.1)
Cash disposed from sale of Russia, net of proceeds
—
(6.0)
Proceeds from company-owned life insurance
—
1.5
Proceeds from sale of Persol Holdings investment
—
196.9
Proceeds from sale of equity method investment
—
119.5
Proceeds from equity securities
2.0
—
Other investing activities
(0.4)
—
Net cash (used in) from investing activities
(10.8)
167.7
Cash flows from financing activities:
Net change in short-term borrowings
(0.7)
0.2
Financing lease payments
(1.0)
(1.2)
Dividend payments
(8.3)
(7.7)
Payments of tax withholding for stock awards
(1.7)
(0.9)
Buyback of common shares
(42.2)
(27.2)
Contingent consideration payments
(2.5)
(0.7)
Other financing activities
(0.2)
0.1
Net cash used in financing activities
(56.6)
(37.4)
Effect of exchange rates on cash, cash equivalents and restricted cash
(1.9)
(7.4)
Net change in cash, cash equivalents and restricted cash
(35.9)
11.2
Cash, cash equivalents and restricted cash at beginning of period
162.4
119.5
Cash, cash equivalents and restricted cash at end of period
$
126.5
$
130.7
KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES BY GEOGRAPHY
(UNAUDITED)
(In millions of dollars)
Third Quarter
%
CC %
2023
2022
Change
Change
Americas
United States
$
795.5
$
861.0
(7.6)
%
(7.6)
%
Canada
50.9
43.3
17.5
20.7
Puerto Rico
26.5
28.3
(6.2)
(6.2)
Mexico
18.4
10.9
68.4
41.9
Total Americas Region
891.3
943.5
(5.5)
(5.7)
Europe
Switzerland
57.0
55.2
3.3
(5.6)
Portugal
48.6
41.9
15.9
7.2
France
47.0
45.8
2.8
(5.0)
Italy
16.1
16.4
(2.3)
(9.6)
Russia
—
5.0
(100.0)
(100.0)
Other
47.1
49.8
(5.5)
(12.3)
Total Europe Region
215.8
214.1
0.8
(7.0)
Total Asia-Pacific Region
10.9
10.3
5.8
9.7
Total Kelly Services, Inc.
$
1,118.0
$
1,167.9
(4.3)
%
(5.8)
%
KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES BY GEOGRAPHY
(UNAUDITED)
(In millions of dollars)
September Year to Date
%
CC %
2023
2022
Change
Change
Americas
United States
$
2,647.1
$
2,746.5
(3.6)
%
(3.6)
%
Canada
142.2
122.7
15.9
21.4
Puerto Rico
81.1
84.8
(4.3)
(4.3)
Mexico
55.1
32.4
70.0
49.1
Total Americas Region
2,925.5
2,986.4
(2.0)
(2.0)
Europe
Switzerland
165.9
165.5
0.3
(5.0)
France
145.0
150.8
(3.8)
(5.5)
Portugal
142.3
125.8
13.2
10.9
Italy
49.5
54.3
(8.8)
(10.4)
Russia
—
63.4
(100.0)
(100.0)
Other
142.4
152.8
(6.8)
(7.2)
Total Europe Region
645.1
712.6
(9.5)
(11.6)
Total Asia-Pacific Region
32.9
32.6
1.0
5.8
Total Kelly Services, Inc.
$
3,603.5
$
3,731.6
(3.4)
%
(3.8)
%
KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
THIRD QUARTER
(UNAUDITED)
(In millions of dollars)
2023
2022
SG&A Expenses:
As Reported
Restructuring(7)
Adjusted
As Reported
Professional & Industrial
$ 57.7
$ (4.0)
$ 53.7
$ 65.3
Science, Engineering & Technology
47.8
(0.7)
47.1
53.4
Education
22.4
(0.6)
21.8
21.4
Outsourcing & Consulting
39.0
(1.8)
37.2
37.7
International
31.2
—
31.2
31.4
Corporate
30.3
(8.3)
22.0
21.9
Total Company
$ 228.4
$ (15.4)
$ 213.0
$ 231.1
2023
2022
Earnings from Operations:
As Reported
Restructuring(7)
Adjusted
Adjusted
Professional & Industrial
$ 7.8
$ 4.0
$ 11.8
$ 5.0
Science, Engineering & Technology
20.2
0.7
20.9
22.9
Education
(2.6)
0.6
(2.0)
(4.8)
Outsourcing & Consulting
2.5
1.8
4.3
6.4
International
2.5
—
2.5
1.9
Corporate
(30.3)
8.3
(22.0)
(21.9)
Total Company
$ 0.1
$ 15.4
$ 15.5
$ 9.5
KELLY SERVICES, INC. AND SUBSIDIARIESRECONCILIATION OF NON-GAAP MEASURESTHIRD QUARTER(UNAUDITED)(In millions of dollars)
2022
Earnings from Operations:
As Reported
Loss on disposal(4)
Goodwill impairment charge(6)
Adjusted
Professional & Industrial
$ 5.0
$ —
$ —
$ 5.0
Science, Engineering & Technology
22.9
—
—
22.9
Education
(4.8)
—
—
(4.8)
Outsourcing & Consulting
(24.3)
—
30.7
6.4
International
1.9
—
—
1.9
Corporate
(21.9)
—
—
(21.9)
Loss on disposal
(0.2)
0.2
—
—
Total Company
$ (21.4)
$ 0.2
$ 30.7
$ 9.5
KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
SEPTEMBER YEAR TO DATE
(UNAUDITED)
(In millions of dollars)
2023
2022
SG&A Expenses:
As Reported
Restructuring(7)
Adjusted
As Reported
Professional & Industrial
$ 183.8
$ (7.3)
$ 176.5
$ 204.1
Science, Engineering & Technology
150.6
(1.2)
149.4
161.4
Education
69.3
(1.0)
68.3
60.4
Outsourcing & Consulting
117.2
(2.3)
114.9
111.8
International
96.2
(0.6)
95.6
99.2
Corporate
86.7
(15.2)
71.5
70.4
Total Company
$ 703.8
$ (27.6)
$ 676.2
$ 707.3
2023
2022
Earnings from Operations:
As Reported
Asset impairment(5)
Restructuring(7)
Adjusted
Adjusted
Professional & Industrial
$ 16.3
$ 0.3
$ 7.3
$ 23.9
$ 27.1
Science, Engineering & Technology
56.7
0.1
1.2
58.0
63.9
Education
22.3
—
1.0
23.3
8.8
Outsourcing & Consulting
5.2
2.0
2.3
9.5
15.8
International
3.2
—
0.6
3.8
9.1
Corporate
(86.7)
—
15.2
(71.5)
(70.4)
Total Company
$ 17.0
$ 2.4
$ 27.6
$ 47.0
$ 54.3
KELLY SERVICES, INC. AND SUBSIDIARIESRECONCILIATION OF NON-GAAP MEASURESSEPTEMBER YEAR TO DATE(UNAUDITED)(In millions of dollars)
2022
Earnings from Operations:
As Reported
Gain on sale of assets(3)
Loss on disposal(4)
Goodwill impairment charge(6)
Adjusted
Professional & Industrial
$ 27.1
$ —
$ —
$ —
$ 27.1
Science, Engineering & Technology
63.9
—
—
—
63.9
Education
8.8
—
—
—
8.8
Outsourcing & Consulting
(14.9)
—
—
30.7
15.8
International
9.1
—
—
—
9.1
Corporate
(70.4)
—
—
—
(70.4)
Loss on disposal
(18.7)
18.7
—
—
Gain on sale of assets
5.3
(5.3)
—
—
—
Total Company
$ 10.2
$ (5.3)
$ 18.7
$ 30.7
$ 54.3
KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
(In millions of dollars except per share data)
Third Quarter
September Year to Date
2023
2022
2023
2022
Income tax expense (benefit)
$ (4.9)
$ (5.0)
$ (5.0)
$ (13.1)
Taxes on investment in Persol Holdings(1)
—
—
—
18.4
Taxes on foreign currency matters(2)
—
—
—
(1.5)
Taxes on gain on sale of assets(3)
—
—
—
(1.3)
Taxes on loss on disposal(4)
—
—
—
—
Taxes on asset impairment charge(5)
—
—
0.6
—
Taxes on goodwill impairment charge(6)
—
5.3
—
5.3
Taxes on restructuring charges(7)
3.9
—
6.9
—
Adjusted income tax expense
$ (1.0)
$ 0.3
$ 2.5
$ 7.8
Third Quarter
September Year to Date
2023
2022
2023
2022
Net earnings (loss)
$ 6.6
$ (16.2)
$ 25.0
$ (61.6)
Loss on investment in Persol Holdings, net of taxes(1)
—
—
—
48.8
Loss on foreign currency matters, net of taxes(2)
—
—
—
16.4
Gain on sale of assets, net of taxes(3)
—
—
—
(4.0)
Loss on disposal, net of taxes(4)
—
0.2
—
18.7
Asset impairment charge, net of taxes(5)
—
—
1.8
—
Goodwill impairment charge, net of taxes(6)
—
25.4
—
25.4
Restructuring charges, net of taxes(7)
11.5
—
20.7
—
Adjusted net earnings
$ 18.1
$ 9.4
$ 47.5
$ 43.7
Third Quarter
September Year to Date
2023
2022
2023
2022
Per Share
Per Share
Net earnings (loss)
$ 0.18
$ (0.43)
$ 0.67
$ (1.62)
Loss on investment in Persol Holdings, net of taxes(1)
—
—
—
1.28
Loss on foreign currency matters, net of taxes(2)
—
—
—
0.43
Gain on sale of assets, net of taxes(3)
—
—
—
(0.10)
Loss on disposal, net of taxes(4)
—
0.01
—
0.49
Asset impairment charge, net of taxes(5)
—
—
0.05
—
Goodwill impairment charge, net of taxes(6)
—
0.67
—
0.67
Restructuring charges, net of taxes(7)
0.32
—
0.56
—
Adjusted net earnings
$ 0.50
$ 0.25
$ 1.28
$ 1.15
Note: Earnings per share amounts for each quarter are required to be computed independently and may not equal the amounts computed for the total year.
KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
(In millions of dollars)
Third Quarter
September Year to Date
2023
2022
2023
2022
Net earnings (loss)
$ 6.6
$ (16.2)
$ 25.0
$ (61.6)
Other (income) expense, net(2)
(1.6)
(0.2)
(3.0)
(1.9)
Income tax expense (benefit)
(4.9)
(5.0)
(5.0)
(13.1)
Depreciation and amortization
8.4
8.6
25.6
24.7
EBITDA
8.5
(12.8)
42.6
(51.9)
Equity in net earnings of affiliate
—
—
—
(0.8)
Loss on investment in Persol Holdings(1)
—
—
—
67.2
Loss on foreign currency matters(2)
—
—
—
20.4
Gain on sale of assets(3)
—
—
—
(5.3)
Loss on disposal(4)
—
0.2
—
18.7
Asset impairment charge(5)
—
—
2.4
—
Goodwill impairment charge(6)
—
30.7
—
30.7
Restructuring(7)
15.4
—
27.6
—
Other, net(8)
1.6
1.0
4.3
2.5
Adjusted EBITDA
$ 25.5
$ 19.1
$ 76.9
$ 81.5
Adjusted EBITDA margin
2.3 %
1.6 %
2.1 %
2.2 %
KELLY SERVICES, INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP MEASURES (UNAUDITED)
Management believes that the non-GAAP (Generally Accepted Accounting Principles) information excluding the 2023 restructuring charges, the 2023 impairment charge, the 2022 sale of the Persol Holdings investment, the 2022 losses on the fair value changes of the investment in Persol Holdings, the 2022 losses on foreign currency matters, the 2022 gain on sale of assets, the 2022 loss on disposal, and the 2022 goodwill impairment charge, are useful to understand the Company’s fiscal 2023 financial performance and increases comparability. Specifically, Management believes that removing the impact of these items allows for a meaningful comparison of current period operating performance with the operating results of prior periods. Management also believes that such measures are used by those analyzing performance of companies in the staffing industry to compare current performance to prior periods and to assess future performance.
Management uses Adjusted EBITDA (adjusted earnings before interest, taxes, depreciation and amortization) and Adjusted EBITDA Margin (percent of total GAAP revenue) which Management believes is useful to compare operating performance compared to prior periods and uses it in conjunction with GAAP measures to assess performance. Our calculation of Adjusted EBITDA may not be consistent with similarly titled measures of other companies and should be used in conjunction with GAAP measurements. Management also uses year-to-date free cash flow (operating cash flows less capital expenditures) to indicate the change in cash balances arising from operating activities, net of working capital needs and expenditures on fixed assets.
These non-GAAP measures may have limitations as analytical tools because they exclude items which can have a material impact on cash flow and earnings per share. As a result, Management considers these measures, along with reported results, when it reviews and evaluates the Company’s financial performance. Management believes that these measures provide greater transparency to investors and provide insight into how Management is evaluating the Company’s financial performance. Non-GAAP measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.
(1) In 2022, the loss on the investment in Persol Holdings represents the change in fair value up until the date of the sale of the investment on February 15, 2022 as well as the loss on the sale of the investment during the period presented and the related tax benefit.
(2) In 2022, the loss on foreign currency matters includes a $20.4 million loss on currency translation resulting from the substantially complete liquidation of the Company’s Japan entity, partially offset by a $5.5 million foreign exchange gain on the Japan entity’s USD-denominated cash balance. The foreign exchange gain is included in other (income) expense, net in the EBITDA calculation.
(3) Gain on sale of assets in 2022 is related to the sale of under-utilized real property in the second quarter of 2022 and other real property sold in the first quarter of 2022.
(4) Loss on disposal in 2022 represents the write-off of the net assets of our Russian operations that were sold in the third quarter of 2022.
(5) Asset impairment charge in the second quarter of 2023 represents the impairment of right-of-use assets related to an unoccupied existing office space lease.
(6) Goodwill impairment charge in 2022 is the result of an interim impairment test the Company performed related to RocketPower due to a triggering event caused by changes in market conditions.
(7) Restructuring charges in the second and third quarters of 2023 relate to a comprehensive transformation initiative that includes actions that will further streamline the Company’s operating model to enhance organizational efficiency and effectiveness. These restructuring charges include $10.4 million of severance, $4.5 million of costs to execute the transformation, and $0.5 million of lease termination expenses in the third quarter of 2023 and $4.5 million of costs to execute the transformation and $1.1 million of severance in the second quarter of 2023. Restructuring charges in the first quarter of 2023 represent severance costs and lease and other terminations as a result of management undertaking actions to further our cost management efforts in response to the current demand levels and reflects a repositioning of our P&I staffing business to better capitalize on opportunities in local markets.
(8) Other, net primarily represents amortization of capitalized hosted software implementation costs.
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